Hotel, Hampton Disagree Over Bill

October 10, 2002|By SUSAN FRIEND Daily Press

HAMPTON — The Radisson Hotel failed to make a $3.5 million balloon payment to the city in April, and after months of negotiating, the downtown hotel still has not come to any agreement on how or when the money will be repaid.

The money is part of a loan the city made when the hotel was built in 1987.

City Attorney Paul Burton said the hotel's owners, Olde Hampton Hotel Associates, maintain the due date for the payment is April 1, 2012, and not this year, as city documents indicate.

"We came to an agreement to extend the due date to Aug. 1," Burton said. "That date has come and gone, and negotiations are still continuing."

The city has had financial squabbles with the Radisson twice before, in 1994 and 1998. Both involved refinancing the hotel's debt to the city.

In the meantime, Burton said, to appease the bank involved in the deal, the city has provided the hotel owners with a $1 million letter of credit that is good through 2016, when the $10 million in hotel bonds issued in 1987 are paid off. Burton said the hotel's payments on the bonds are current.

Do the hotel owners have the $3.5 million the city says is due?

"They haven't said, and I haven't asked," Burton said.

Does the city treat all its debtors that way?

"The city looks at each one on an individual basis," Burton said. "But you have to remember, we initiated this hotel development to revitalize downtown. We wanted it to help us bring in more development, and we have approached it all along with that thrust.

"Now, they haven't made the payment, and you can draw a conclusion from that. But in these kinds of transactions, the longer the hotel is in business, the greater security we have to be paid off. So we're going to try to protect our investment, and hopefully we'll be able to come to some agreement in the next month or two."

But Burton stressed that the value of the property to the city is not just in terms of loan repayments.

"When you add up what the hotel generates in real-estate taxes plus sales taxes, meals taxes, and room and lodging taxes, you are talking about an amount something in the neighborhood of a million dollars a year," Burton said. "The point I am making is that is a worthwhile amount. It's a substantial amount of taxes to the city, and it is a source of money that the city would like to see continue."

Burton said the hotel knows it must repay the money.

"They have the understanding that either they need to pay us the amount they owe us or extend the time over which they will pay it back," he said of the owners. "That's what we're in process of resolving now, and in my humble opinion, it will be worked out in the next month or two."

(THE PROBLEM

* The city says a $3.5 million balloon payment was due on a loan in April 2002.